Berlin Residents Looking For Electric Cost Answers

BERLIN – Worries over
increasingly high electricity bills drove more than 200 Berlin residents to a
citizen meeting last week on electric rates at Berlin Intermediate School, but
they came away without the solution so many were looking for.

The meeting, organized by

resident Lisa Hall, featured a talk by Ron Birely, the former Berlin mayor and finance director who has a

stormy history with the town including an ongoing lawsuit. In January 2005,
recently deceased Mayor Tom Cardinale fired Bireley as finance director. At the
time, Cardinale cited philosophical differences over the town’s huge debt load,
saying that he was not comfortable with Berlin’s
multi-million dollars in bond debt incurred to improve its power plant and
electric system. Bireley subsequently sued the town for defamation. That
lawsuit was dismissed in July, but he has appealed that decision.

Bireley told crowds assembled in
the school cafeteria last Thursday night that the high electric costs can be
fixed.

“It won’t take that much to get
this turned around but it’s not going to be with a consultant,” he said,
referring the Berlin Mayor and Council’s decision last week to hire
professional advisors for financial and practical advice for the electric
utility.

The town uses its power plant
for just 3 percent of its power needs, but Bireley says it should be used more
often. The strike price is too high, he said.

Berlin only runs the power plant when
the cost of generating electricity is less than the cost to purchase
electricity. According to Bireley, electric utility staff has calculated some
costs into the price to run the generators that do not belong in that equation,
which drives up the strike price.

If those costs were calculated
correctly, Bireley said, the strike price would be lower and the generators
would run more often and provide lower cost energy to electric customers.

The problem is not the
much-talked of Power Cost Adjustment (PCA) charge, Bireley said. The PCA is
simply the difference between the set rate and the actual cost of the power.

The electric rate has not
changed for several years. The change in the PCA has become more obvious since
the town opted earlier this year to change the PCA, up or down as necessary,
four times a year and not just once.

The PCA should be ignored when
calculating power costs, Bireley said. Instead, electric customers should look
at the entire cost of their electric bill, then divide that number by the
number of kilowatt hours (KWH) used, to give the per KWH cost.

Berlin purchases power from Conectiv,
most recently for 13.5 cents to 14 cents per KWH, according to Bireley.

Berlin Administrative Director
Linda Bambary said later that this figure is incorrect. Over the last three
months, Berlin
has purchased power at an average of 11 cents per KWH.

The other 8 cents goes for
electric employee salaries, plant maintenance and fuel, debt service, and the
general fund of Berlin
for overhead such as administrative and payroll services.

Berlin cannot simply leave the power
grid and power its own utility, Bireley said at the Thursday meeting.

“We do not have sufficient generation
in the town to supply our needs,” he said.

The town needs reliable and
knowledgeable people to run the electric system, Bireley said, but the elected
officials are only in town hall for a few hours at a time twice a month and do
not know what they are doing.

The town needs a utilities
manager, Bireley told the crowd, but Berlin
fired the last one four years ago and never refilled that position.

Interim Mayor Gee Williams has
undertaken a staff reorganization since he took office in May and having already
filled several other outstanding positions, has said he will work with the
electric consultants to develop the right job description for the slot.

The town also needs a power
purchasing agreement, according to Bireley. Since Cardinale began pursuing, with
the support of the Berlin Council, the sale of the electric system four years
ago, Berlin
has been buying power on a month-to-month basis.

Berlin Councilwoman Paula Lynch,
the only elected official to attend the citizen meeting, stood up at the end of
the meeting to answer some of the questions and correct some of the statements
made.

The last time Berlin sent out a request for proposals for
a power purchasing agreement, about six months ago, none of the bids were a
better deal than the month-to-month purchasing, Lynch said, adding that a
purchasing agreement should once again be explored. She cautioned that bidding
takes time.

“It’s a long process with
government,” Lynch said.

Bireley offered a list of
changes to make at home to save energy that met derision from the crowd.
Several audience members said they wanted answers, not to be told that they
were the problem.

Under deregulation, in Maryland, electric
customers can go to other power companies for service, Bireley said, but the
few in the audience who had tried it said they could not get service from
another power concern.

Bireley
told the crowd to keep the high electric prices in mind in October, urging
townsfolk to vote in the mayoral and council election. As of the meeting, there
was only one contested race in the election, with interim Mayor Gee Williams
facing former Mayor Rex Hailey. Williams was part of the council that voted to
fire Bireley in 2005. That vote was split 3-2 and council members have been
reluctant to reveal the vote break down.

Less than a week after the
meeting, however, Hall entered the District II town council race, running
against fellow political newcomer Thom Gulyas.

Bireley urged the audience to
attend town council meetings and ask the same questions there, although he also
repeatedly said at the Thursday meeting that the Mayor and Council do not
understand the electric system and do not know how to manage it.

“If it was properly managed, our
costs would go down,” he said.

Berlin Utilities Commission
member Erik Quisgard also addressed the crowd.

“They’re doing what they can to
be more effective at the plant, but there’s ‘X’ million dollars of debt. You’ve
got to pay the bonds,” said Quisgard. “The money is spent. It’s not as easy as
flipping a switch or hiring a different person … debt service isn’t going away
no matter what you did unless you bring in $10 million.”

About 2 to 2.5 cents per KWH
goes to pay down Berlin’s
bond debt, Bambary said the week after the meeting.

While that debt is high, Bambary
explained that the town recently refinanced one bond for a lower interest rate
and that two bonds will be paid off in 2011.

Three vacant positions in the
electric utility also reduce the costs of the operation as those salaries and
benefits are not currently being paid, Bambary said.

“There is the reduction of the
debt going on,” she said.

But there is a counterbalance to
the debt reduction, which is the loss of large industrial customers like the
Tyson chicken processing plant and the limited customer territory. Choptank
Electric can spread costs over thousands of customers, in contrast.

While the meeting was not the
acrimonious gathering many expected, some expressed some strong opinions.

“Why is the town continuing to
let people build and build and expand and expand when we don’t have enough
electricity?” asked an audience member.
“Our future is being sucked up.”

One man said that developers
should be allowed to put up more homes, which could then defray the cost of the
bonds to the rest of the customer base.

Surprisingly, several
townspeople supported selling the power plant, in order to pay off the major
debt incurred to buy generators over the last two decades.

“It’s actions we need,” said one
man in response to the suggestion that townsfolk push elected officials to
answer their questions. “No one’s giving answers.”

Quisgard remarked that he had
not seen the people at the citizen meeting at town council or BUC meetings.

“I don’t know how you expect to
get answers from someone who doesn’t go to meetings,” he said.

“There’s no question we have a
problem. That’s a given,” said Lynch. “You’re asking for answers. We’re asking
for answers.”

Hall asked Lynch to see that the
electric cost question was put on the Berlin Mayor and Council agenda for the
next meeting on Monday, Sept. 8.

Lynch agreed to ask Williams to
add the topic and said that they would look at scheduling the meeting at a

different venue than town hall to accommodate a possible crowd. Staff could not confirm a venue change as of

Sept. 4, however.

“If you want the answers, show
up at the council meeting, Make them accountable,” Hall said.

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